Inside the New Frontiers of Clean Energy

Energy is much of the world's greatest expense; it's also an industry with incredible potential to create jobs and democratize communities. Here's how.

Last week, we celebrated our National Independence Day. As parts of the country blew past temperature records, power outages left a million homes without electricity, and drought conditions forced cancellations of fireworks shows in cities from Missouri to California, we also marked what we might call Energy Dependence Day. Once again, we were reminded of the mismatch between our most basic ideals and an energy system that harms our planet, while leaving our communities and nation less secure.

Fortunately, things are changing fast. And we--the people--are the ones doing the changing. Millions of Americans, myself included, are back at work this week as members of the growing clean energy economy. We're investing in, inventing, building, and benefiting from our own neighborhood solar panels, windmills, smart grids, batteries, and electric cars. This change in our physical infrastructure is in turn ushering in a social revolution of incredible potential. Although no one knows exactly how this transformation will unfold, today seemed like a good day to highlight shifts already underway.

To put it simply, power by the people is power to the people. Here's why.

1. Clean Energy Has a Rippling Economic Impact

Let's start with the economy. For too long, almost all of us have been energy consumers. Now, though, we're rapidly starting to become energy producers. In California, for instance, the number of solar installations grew from 500 to more than 50,000 between 1999 and 2011. Most of these new solar power producers are saving on--or have eliminated outright--their utility bills. This means more dollars that circulate within communities instead of flowing to utilities and fossil fuel companies.

Or, think about all the property owners already making double-digit returns on investments in energy efficiency. McKinsey and Co. has estimated that the average rate of return for global energy-efficiency investments that could be made by 2020 is 17%, and that the total amount of money that could be saved via these investments is $900 billion. As Michael Shuman writes in Local Dollars, Local Sense, many homeowners can earn such good rates of return by investing in efficiency at home that they should see energy efficiency a new high-yield investment type--a way of diversifying portfolios so that they includes less Wall Street and more stable local value.

2. Creating Companies Means Creating Jobs

The economic impacts of a clean energy economy go well beyond utility bills. The types of institutions that financed and built the big energy world are poorly suited to creating a distributed energy system. Initially, most in the energy industry construed this mismatch as a problem. Now that entrepreneurs are tackling the problem, it's becoming an opportunity to reconfigure our whole understanding of how finance and investment should function. Solar power has been adding jobs at a faster rate than any other industry in large part because of a handful of entrepreneurs who pioneered leasing innovations that allow homeowners to finance solar arrays for little or no upfront cost. My own company, Solar Mosaic, is one of several businesses aiming to dramatically expand renewable energy by using the Web to make it possible for everyone (not just property owners) to put their money to work creating clean energy for their communities.

Looking beyond the economy, we might ask how a localized clean energy system could change political power dynamics. Many of us have learned the hard way how difficult it is to effect political change on energy issues when utilities and fossil fuel companies regularly rank among the top 10 Washington lobbyists. Now we have another tool. People who become energy producers are people with an active stake in fighting for an economy and a power system that values clean energy.

3. It Will Help Reenforce the Country's Building Blocks

A final realm of change that deserves mention is community. In many cases, Americans will only be able to access the new clean energy economy if they are able to find ways to work with their neighbors to pool time and resources. Again, we encounter an opportunity masked as a challenge. In Minnesota, communities have pioneered an innovative wind power financing model that pairs local owners and larger investors who can process renewable energy tax credits. As a result, the state now leads the country in community-scale wind projects. The citizens of Colorado, meanwhile, have pushed the state to pioneer community-funded "solar gardens." In both of these examples, and in others across the country, energy is no long something that simply flows into our private homes. Instead, it's a hub for community.

As I mentioned, no one fully understands the sort of sea change a localized energy system might bring about. Grist.org energy commentator David Roberts has compared our present moment to the early days of the Internet, when we had only an inkling of the power of the tools at our disposal. It's an apt analogy: ahead of us is an opportunity to democratize the production and dissemination of energy in the same way the Internet democratized the power and production of information. The major difference may be scale. Energy is the world's largest industry, and the economic sector with the single greatest impact on the world's environment.

In the coming years, more and more Americans are going to begin to have opportunities to invest in, buy, or organize to create clean local energy. As they do, they'll like become familiar with a new acronym: IPP. It stands for Independent Power Producer, and is the industry's way of referring to any non-utility power source--to every school with a solar panel on its roof and every group of farmers who have bought into a community wind cooperative.

Independent Power Producer. It may just be the most beautiful piece of jargon you'll ever hear.

Billy Parish is Co-Founder and President of Solar Mosaic, a solar investment platform. He's also co-author of Making Good: Finding Meaning, Money & Community in a Changing World. @BillyParish